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Virgin Mobile holds out for 400p per share

According to reports in the Sunday Telegraph, institutional shareholders in Virgin Mobile are holding firm and have told the company’s board that it should reject any takeover bid from ntl of less than 400p per share.

Sir Richard Branson, who owns 72% of Virgin Mobile and is keen to see the deal go ahead, has said that 360p a share might be enough to secure a deal but institutional investors are standing firm and want 400p, reports the paper.

In December, ntl offered 323p a share for Virgin Mobile – this offer was rejected by the Virgin Mobile board, chaired by Charles Gurassa. The paper quotes an executive close to one investor as saying: “Gurassa has to be very careful. He has to act in the interests of all shareholders, not just Branson.”

Branson would swap his stake in Virgin Mobile for 14% of ntl should the takeover go through, and his Virgin Group would also benefit from licensing the Virgin brand to ntl. Interestingly, The Register states that as part of the deal, should it be successful, the whole business would be renamed under the Virgin brand.

However, things are complicated further by a private equity consortium known to have been eyeing the enlarged ntl-Telewest group for a while. The group took a step back when ntl’s bid for Virgin Mobile was revealed in December.

The existence and price of a possible private equity bid for an enlarged ntl-Virgin also has a direct bearing on the value of Virgin Mobile to ntl. Negotiations are due to start again this week after the Christmas break and rumours suggest ntl my be prepared to increase its bid by 10%.